Publishers Set To Pile On Napster

Napster’s legal troubles could be about to get a whole lot worse, as thousands of music publishers could enter into a class-action suit against the file-trading company. Independent musicians, however, are still shut out of the litigation.

As part of a copyright infringement case against Napster in federal district court on Tuesday, Judge Marilyn Hall said that 27,000 music publishers would likely be allowed the opportunity to consolidate their cases into one class-action suit. While issuing no formal ruling, Patel said she expected to create a “limited class” of plaintiffs by determining a specific time frame during which publishers from the Harry Fox Agency would be allowed to join a lawsuit against Napster.

She also said that publishers who wanted to get in on the suit would have to comply with the original injunction order, which requires copyright owners to provide Napster with a list of copyrighted songs, artists names, and when available, file names that are being traded.

The group would be consolidated into the original lawsuit brought on behalf of the music labels by Lieber/Stoller Music, which listed only two songs in its original complaint.

Patel became visibly angry at Napster when Ramos showed proof that Jailhouse Rock and Unchained Melody were still available through Napster’s network over a year after the original complaint was filed.

Ramos said that over 1,000 files of Unchained Melody alone appeared on Napster’s system on Monday.

However, Napster lawyers countered that the addition of so many plaintiffs would end any hope that the company had of reaching an out-of-court settlement with the publishers. Instead, the legal team hoped to concentrate on working with the lawyers for the original plaintiffs.

Without that settlement, Napster faces the very real possibility of being forced to close its doors.

“We are thinking about settling this in an expeditious way, and we might be able to resolve this whole issue with a class,” said Napster lawyer Lawrence Pulgram. “We think that the Lieber group would be a stable class to work with. Any settlement would then eliminate these problems, and wouldn’t run us into a $9 billion claim of damages, and allow Napster to keep running.”

Patel, who later in the day reiterated her belief that the file-trading service should be shut down, said she was leaning toward granting a limited class action suit since Napster would be liable for everyone’s copyright infringements. That “commonality” among the defendants was probably enough to justify a combined suit, Patel said.

The potential damages from the suit would reach nearly incomprehensible numbers as each publisher would be able to collect up to $150,000 per infringement. With millions of files being traded through the file-trading networks each day, Napster’s final bill would be too high to pay.

On the other hand, the potential damages would quickly bankrupt Napster, making the company judgment-proof and unable to pay any award.

Ed Murphy, CEO of the National Music Publishers Association, said that he wouldn’t mind if the publishers never received a dime. Instead, he said the move to certify the class action suit would be the first step in publishers reclaiming control over the distribution of their work.

“We’re starting from a ‘rights’ point of view in the legal battle, and we want to be like everyone else,” Murphy said. “Our publishers want to know where they stand. This is a rights issue, it’s not a compensation issue yet.”

Murphy said that if Patel decided to grant the limited class action suit, his organization would immediately contact members through e-mail, phone calls, and direct mailings to make sure that each publisher had the opportunity to join the suit.

Independent musicians and labels didn’t fare as well, and now face the distinct possibility that they could be left out of the Napster litigation altogether.

Patel said that the complex legal issues involved with international copyright law and the lack of a central organization to represent independent musicians made it unlikely that she would grant them class action status

Hannah Bentley, a San Francisco lawyer representing independent musicians, said she would continue to try to build a coalition of artists and labels willing to press forward with their claims. If Patel does rule against class certification, Bentley said it was likely she would appeal that ruling to the Ninth Circuit Court of Appeals.

“The fact is that independents are just as damaged because they aren’t getting compensated for their work. The most important thing is to start building coalitions around this area,” Bentley said.